Citing Covid disruptions, Moody’s cuts ratings of SBI, HDFC Bank

MUMBAI: Moody’s Investors Service on Tuesday downgraded the ratings of state-run State Bank of India and India’s largest private lender HDFC Bank Ltd, a day after it cut the country’s sovereign rating to the lowest investment status. The US rating agency cited disruptions from the coronavirus outbreak and a fall in asset prices, creating severe credit shocks across sectors and weakening borrowers’ credit profiles for its rating action.

SBI and HDFC Bank are among 11 Indian banks covered under Moody’s latest rating action. The others are Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India (EXIM India), Indian Overseas Bank, IndusInd Bank, Punjab National Bank and Union Bank of India.

“The rapid and widening spread of the coronavirus outbreak, volatile oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The Indian banking sector has been affected, given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles,” said Moody’s. It has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI to Baa3 from Baa2. echoing the sovereign rating of India.